“The economic crisis was caused by the fact that a lot of Americans lack basic financial literacy skills, which makes it difficult to make wise credit decisions, as was evidenced by the mortgage crisis and other areas of the overall economic crisis,” said Levine. “However, with the advent of the new presidency, also comes a new approach when it comes to undertaking the goal of increasing national financial literacy in schools. And the transition to this new approach takes time.”

Everett Hoffman, 22, of Staten Island, N.Y., wishes he had taken the elective of a personal financial education course in high school. He thinks it would have helped him make wiser spending choices.

“I think it might have been good because I’m learning a lot of things the hard way now being a young adult,” said Hoffman. “But I really do think taking that class might have helped me avoid some minor debit card issues I’ve been having lately, you know basics, like balancing a checkbook.”

Allison Joseph, 21, of Chesapeake, Va., also interviewed on the National Mall, said that her parents still shelter her from having to take care of her finances. She took a macroeconomics course in high school that did not cover personal finance.

“When I went to college, I started getting my own credit card statements, but my parents have always helped me out, so I’m not totally independent in that sense.”

Up to now, only three states require at least a one-semester course devoted to personal finance – Utah, Missouri and Tennessee. Eighteen other states require personal finance instruction to be incorporated into other subject matter. The rest have no requirements, but leave individual schools the choice to implement personal finance education programs in their curricula.

According to JumpStart, a personal financial education course would give students a head start at being less debt-prone by teaching them how to manage checkbooks, how mortgages work, and other basic financial life skills.

I will readily admit that the tone and tenor of my writing at Sense on Cents is not geared toward high school students, but certainly the Financial Primers in the right sidebar (Debt Management, Financial Aid, Insurance, Investing, Mortgage Finance) provide a wealth of information for anybody embarking down a financial path.

By the same token, I am heartened by the number of college students and recent college grads who have informed me how much they have learned and are learning from Sense on Cents.

Please spread the word and do not be bashful about asking me anything.

Financial literacy is the first step in becoming financially educated which is the path to becoming financially independent.

By Jody Shenn
July 22 (Bloomberg) — Mortgage bonds guaranteed by U.S.
agency Ginnie Mae will probably swell to $1 trillion by the end
of 2010 because borrowers with low down payments or credit
scores can only qualify for government-insured loans, Bank of
America Corp. analysts said.
The Federal Housing Administration, which insures loans
with down payments as low as 3.5 percent and has no credit-score
requirements, is “the only source of funding for these
leveraged borrowers,” Ankur Mehta and Ohmsatya Ravi, the New
York-based analysts, wrote in a report yesterday.
Debt explicitly backed by the U.S. through Ginnie Mae,
formally known as the Government National Mortgage Association,
climbed to $680 billion as of June 30 from $360 billion two
years earlier, as record home-price declines caused the collapse
of the “non-agency” mortgage-bond market and tougher standards
at banks, mortgage insurers and mortgage-finance companies
Fannie Mae and Freddie Mac, the analysts said.
Further growth will be fueled by more borrowers using FHA
loans to buy homes or to refinance, either to tap home equity or
to lower their payments, they wrote. Lenders package those
mortgages into bonds backed by Ginnie Mae.
Some lawmakers have said FHA loans, which charge 1.75
percent upfront and 0.55 percent annually for home-loan
insurance, may cause the U.S. losses. Those officials include
Senator Richard Shelby, an Alabama Republican who in January
said the agency “poses a significant risk to taxpayers.”
Ginnie Mae offers buyers of mortgage bonds composed of loans
backed by other agencies guarantees of timely principal and
interest payments.

Keeping Programs Unchanged

“We are assuming here that the government will not change
the FHA/GMNA mortgage programs significantly,” the Bank of
America analysts said.
Last month, applications for mortgages backed by the FHA or
Department of Veterans Affairs represented 35.9 percent of all
applications for refinancings or home purchases, the highest
share since 1990, according to the Washington-based Mortgage
Bankers Association. FHA mortgages represent about half of new
loans for home purchases, up from about 10 percent at the start
of last year, Bank of America said.
Outstanding agency mortgage-backed securities, including
all residential and commercial property debt guaranteed by
Fannie Mae, Freddie Mac or Ginnie Mae, reached $5.04 trillion on
March 31, from $4.6 trillion a year earlier, according to
Federal Reserve data. Non-agency mortgage bonds declined to $2.5
trillion, from $2.88 trillion.
Fannie Mae and Freddie Mac mortgage bonds and debt aren’t
formally backed by the U.S. government. Federal Housing Finance
Agency Director James Lockhart has said their securities carry
an “effective” government guarantee because the companies’
support was strengthened after their September takeovers,
including with $400 billion in taxpayer capital lifelines.
Ginnie Mae’s share of the agency mortgage-bond market may
climb to 18 percent by the end of next year, meaning the
securities “should attract a lot more attention from different
market participants,” the Bank of America analysts said.

Larry Doyle

divvytrader….thanks for sharing this story…another redistribution program in which future taxpayers are effectively subsidizing a certain percentage of current homeowners.

The GNMA market was crushed with the development of sub-prime financing but obviously now it is the only game in town for these borrowers.